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IBM TO LAUNCH BEERSHEVA CYBER CENTER

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EVENTS
INVESTMENT INCENTIVES

Investment Incentives

 


The Law for the Encouragement of Capital Investments

 

The purpose of the Law for the Encouragement of Capital Investments is to strengthen the industrial capability of the country. Below is a short summary of the main points of the new law.

 

A.  Qualification requirements

 

To qualify for benefits under the law the company has to be an industrial company registered in Israel and has to be internationally competitive (i.e. have export capability).  However, Biotechnology and Nanotechnology companies do not have to meet the "export" requirement to qualify.

 

An investment in the Priority Area recognized by the law will be termed an Approved Investment and the company will be designated an Approved Enterprise.

 

B.  Location

 

     For the purposes of the law the country will be divided into two areas.

 

1.       A Priority Area (mainly the Galilee in the north, the Negev in the south and Jerusalem)

 

2.       The Center of the country (i.e. everything not specified in item 1)

 

C   Investment Incentives according to the Law

 

Companies that qualify will be entitled to company tax rates as detailed below. In addition companies located in the Priority Area will also be entitled to an investment grant which will be calculated as a percentage of their approved investment as indicated below.

 

1.        Taxes

                                    Center of the Country                 Priority Area

 

Company Tax rates                    16%                                    9%

 

 

Dividend Tax rate                       20%                                   20%

 

2.     Investment Grant

 

Investment Grant*                     ---                                       20%

 

 

* as a percentage of the approved investment

 

 

D. Benefit Period

 

There is no termination period regarding the tax benefit. As long as the company remains internationally competitive it is eligible for the tax benefit as prescribed by the law.

 

 

 

E   Special Tax Benefits Program

 

 

Large companies that meet the following criteria will be entitled to the benefits as listed below.

Criteria:

1)      Total annual income in Israel of at least 1.5 billion NIS

2)      The combined balance sheet of the company is at least 20 billion NIS.

3)      The business plan of the company will include one of the following:

a)      Investment in productive equipment of at least 800 million NIS in the center of the country or  400 million NIS in the Priority Area over a 3 year period.

b)      Investment in R&D of at least 150 million NIS in the center of the country or 100 million NIS in the Priority Area

c)       Employing at least 500 employees in the center of the country or 250 employees in the Priority Area.

 

 

 

Tax Benefits

                           Center of the Country              Priority Area

Company Tax                  8%                                  5%

Dividend Tax  -                  15%                                 15%

 

 

Disclaimer: Invest in Israel offers this information only as an example of common practice in industry. Legal counsel should be consulted to establish the exact level of incentives to be offered.

Last modified: 2/2/2014 pic